Category: News

We celebrated our 14th Annual Greenlining Economic Development Summit in Los Angeles. Once again we brought together the leading community advocates, corporate leaders and government officials in the country to discuss “win-win” opportunities and solutions on issues related to minority economic empowerment.

Fulfilling The Promise: April 21, 2007

KEYNOTE SPEAKERS:

Sheila Bair, Chairwoman FDIC Introduced by George Dean

Janet Yellen, President Federal Reserve Bank of San Francisco Introduced by Cynthia Amador

Former Federal Reserve Board Chairman Alan Greenspan helped dampen a potentially massive financial confidence crisis in 1998. His most daring act is one the Fed should emulate during this foreclosure crisis.

Mr. Greenspan, with the assistance of the Federal Reserve Bank of New York, called an emergency meeting of the major financial players to create a $3.8 billion bailout of Long-Term Capital Management, a hedge fund that was about to go under.

Current Fed Chairman Ben Bernanke could do the same to help stem the homeownership crisis and the precipitously declining value of homes that threatens repayment, even by those who made substantial down payments.

The first step would be to call in all the major investment banks (such as Goldman Sachs, Merrill Lynch, and Bear Stearns), foreign banks (such as BNP Paribas and UBS) and our major regulated financial institutions (such as Citigroup, JPMorgan Chase, and Wells Fargo).

At this meeting the Federal Reserve should seek an initial $10 billion national loss-mitigation fund that could be administered by either the 12 Federal Reserve banks or a consortium of financial institutions that have a stake in resolving the foreclosure crisis.

According to data from CNNMoney.com, the average homeowner’s loss-mitigation cost would be $16,000. If the fund covered even half of this cost, over 1.25 million homeowners could be protected and moved, for example, into lower-cost, long-term, fixed-rate mortgages.

Some estimate that the potential number of foreclosures at 2.2 million. Some of those subject to foreclosure, however, probably should not be helped, especially those who purchased as speculators.

To maximize the protection for the 70% of Americans who live paycheck to paycheck, we would propose that the priority be given to those who have been hit hardest – people in low-income communities – and that eligibility be restricted to those who are at 120% or below the median income.

Another factor that may make the fund successful are the estimates by Fannie Mae that up to 50% of subprime borrowers were eligible or could be made eligible for prime-rate mortgages. In particular, this would be the case if alternative credit scoring methods were put in place that included monthly utility and rental payments.

If properly and expeditiously created, this could almost immediately stem declining home prices and eliminate the glut on the housing market.

What Mr. Greenspan accomplished in 1998 with Long-Term Capital Management may be far easier this time around. This is because the other regulators, in particular Federal Deposit Insurance Corp. Chairwoman Sheila Bair and Comptroller of the Currency John Dugan, have already called for innovative leadership and action. These regulators are already being supported in various ways by House Financial Services Committee Chairman Barney Frank, Senate Banking Committee Chairman Christopher Dodd, and three prominent Democratic presidential candidates: Hillary Clinton, Barack Obama, and John Edwards.

Paradoxically, the total lack of understanding as to the depth and impact of the subprime crisis on our entire financial industry could well add support for this privately financed bailout of the nonspeculator victims of runaway credit policies. Goldman Sachs CEO Lloyd Blankfein made the frank admission that “the only thing we know is that everything will happen.”

Further, Goldman has just raised $3 billion to bail out its own hedge fund, and Bear Stearns recently acknowledged that two of its subprime hedge funds are essentially worthless.

This week, Merrill Lynch downgraded shares of Bear Stearns, Citigroup, and Lehman Brothers to “neutral,” from “buy,” and lowered estimates for the firms’ earnings, due to their credit and mortgage market troubles.

Given the understandable reluctance of the new Fed chairman to assert his influence over the market, it might be well if the presidential candidates, Rep. Frank, and Sen. Dodd began discussing this solution. Of course, it wouldn’t hurt if a few prestigious financial institutions stepped to the plate, as they did during the Long-Term Capital Management crisis.

Perhaps even Henry “the Hammer” Paulson, our Treasury secretary and the former chairman of Goldman Sachs, might play a role in moving the Federal Reserve along.

Mr. Gnaizda is the policy director of the Greenlining Institute in Berkeley, Calif. Mr. Lizarraga is the chairman of the U.S. Hispanic Chamber of Commerce in Washington.

Greenlining Institute has taken a lead role among nonprofits representing the 70% of Americans who live from paycheck to paycheck in raising questions about excessive executive compensation. Each year, CEO compensation increases by 10% or more while median family income has declined over the last five years by 5.9%.

Two years ago, Greenlining Institute reached an agreement with PG&E that required the highest level in the nation of corporate transparency for executive compensation. All PG&E officer compensation, whether received or deferred, had to be reported in a simple verified form and had to include not just the top 5 officers required by the U.S. Securities and Exchange Commission, but all officers.

Recently, the California Public Utilities Commission ordered So Cal Edison, at Greenlining’s request, to follow the PG&E model and, in addition, be the first corporation in the nation to fully report major severance and retirement packages, which often amount to millions of dollars in unreported income.

Presently, the CPUC has, partly at the request of Greenlining, taken the national lead in investigating the impact of excessive executive compensation on ratepayers. Going far beyond SEC requirements, Greenlining has raised the following in the investigation:

All officer compensation must be reported in a simple fashion.

Officer compensation must be made available to ratepayers on an annual basis and in merger proceedings to enable the public to be fully informed.

To highlight the size of CEO compensation, the CEO must also set forth the median salary of non-mangement workers at his/her company and must report the dollar amount of corporate philanthropy to the poor.

The Wall Street Journal and Fortune Magazine report that CEO compensation is often 400 times that of the average workers salary. The CEO’s salary at Edison was approximately 350 times the median wage of non-management at Edison and the compensation of the CEO of Sempra was almost 400 times greater. This occurred despite both being monopolies whose profits are subsidized by ordinary people (ratepayers).

Based on Greenlining’s examination of hundreds of CEO packages, it appears that in almost every case, the compensation to the CEO and his top four officers substantially exceeds the dollar amount of philanthropy made by the corporation to low-income communities.

Perhaps it’s time for the nonprofit world to rise up and urge that cash philanthropy to the poor should always substantially exceed the aggregate compensation of a company’s top five officers. This might not stop excessive executive compensation, but at least low-income communities will benefit from this. Our estimate is that this alone would triple the amount of corporate philanthropy to nonprofits serving the poor.

Those at the San Diego event urge more help for mortgage borrowers at risk of foreclosure.

From the Associated Press

SAN DIEGO — Consumer advocates, minority groups and homeowners — some chanting “Save our homes, fix our loans!” — staged a demonstration outside Countrywide Financial Corp. offices Wednesday, part of a campaign to press the nation’s largest mortgage lender to do more to help borrowers in danger of foreclosure. About 50 people gathered in front of the building in San Diego where the mortgage lender has offices. Some participants held handwritten posters with slogans such as “Our lives are not adjustable” and “Would you give your mom a sub-prime loan?” Continue reading “Groups Protest Countrywide Actions”→

WASHINGTON — Until the boom in subprime mortgages turned into a national nightmare this summer, the few people who tried to warn federal banking officials might as well have been talking to themselves.

Source: LA Watts Times | Written by: KELLIE MIDDLETON, M.P.H. and LEN CHANTY Slow and steady wins the race… If Aesop’s moral holds true, then the race for black equality and social justice, which started nearly 40 years ago, should be nearing its end by now. But it’s not. In the 1960s, a great leader, whose birthday we celebrate today, started a successful movement to mobilize those treated unjustly on the basis of skin color. If Dr. King were alive today, he would realize that the civil rights race is far from being complete. The race for civil rights has shifted from the traditional and obvious discrimination against blacks to something more institutional but just as detrimental and unjust. Continue reading “A Look at Inequalities in Health”→

Source: Irvine school newspaper New University | Written by: Kellie K. Middleton, M.P.H. As students and future leaders, we don’t think enough about how minorities have impacted our state’s economy, politics and health care system. If we did, we would understand the grave importance of diversity now more than ever given California’s changing demographics. In health, the governor’s current reform proposal and an expected physician shortage by 2015 should further heighten our concern for diversity (or lack thereof). Continue reading “Where Would We Be Without Physicians of Color?”→

The United States now stands as the only industrialized nation still opposed to the Kyoto Protocol after Australia ratified the international treaty. Despite the Bush Administration’s failures to ratify Kyoto, American corporations, with little government prodding, are eager to participate in the $5 billion carbon market. Unfortunately, communities of color most impacted by global warming are unlikely to see the direct benefits of this growing carbon market unless changes are made to our current model of purchasing and trading carbon credits. Continue reading “How Emissions Trading Can Help All Communities in California and Fight Global Warming”→

Source: The Greenlining Institute | Written by: Samuel Kang The Greenlining Institute, a multi-ethnic consumer protection organization, filed a petition today with the California Department of Insurance challenging United States Automobile Association’s (USAA) insurance rates. Greenlining’s objection was based on a number of serious concerns stemming from USAA’s treatment of its 5.9 million customers, all of whom are either members or family members of the United States armed forces. Continue reading “Greenlining Demands United States Auto Association to Stop Cheating California’s Military Personnel”→

Just when we thought we’d heard everything from the diversity police, here they come trying to prescribe even the color of charity. The California Assembly last week passed a bill sponsored by state Representative Joe Coto to require foundations with assets of more than $250 million to disclose the race, gender and sexual orientation of their trustees, staff, and even grantees. Look for this to arrive in a legislature near you. Continue reading “The Color of Charity”→

Removing Barriers, Creating Economic Opportunity

About The Greenlining Institute

Founded in 1993, The Greenlining Institute envisions a nation where communities of color thrive and race is never a barrier to economic opportunity. We advance economic opportunity for people of color through advocacy, community and coalition building, research, and leadership development. We work on a variety of major policy issues because economic opportunity doesn’t operate in a vacuum. Rather than seeing these issues as being in separate silos, Greenlining views them as interconnected threads in a web of opportunity. The Greenlining Institute is a 501(C)(3) nonprofit registered in the US under EIN: 94-3173571.